- International Monetary Fund Managing Director Christine Lagarde, in Peru this week for an annual meeting, sits with locals while visiting a market in Pisac on Saturday.
- REUTERS
If Christine Lagarde later this year decides to pass on another five-year term as head of the International Monetary Fund and instead try to make history as the first female French president, she will arguably leave the emergency lender a changed institution.
Ms. Lagarde—at the annual IMF meetings in Peru this week where she’ll urge financial leaders to revive weaker growth prospects—has brought a human touch to an institution long seen for dispensing one hardline prescription: budget austerity.
Under her tenure, for example, the IMF for the first time used its cash to buy debt relief for member states in crises. She urged Ebola-hit West African nations to temporarily beef up health and social spending.
Veteran fund officials say Ms. Lagarde was a breath of fresh air. While the former IMF chief’s style was to craft policy within an exclusive circle—arm-twisting key players in one-on-one meetings—Ms. Lagarde sought to build consensus through a plurality of advice.
“Nobody feels left out, or put into a corner,” said one long-time senior official. Another said she allows everyone to air their opinion, encouraging departments to hash out their differences until consensus is reached.
Her leadership style has revived morale, according to several long-time staffers.
- At a Brookings Institution discussion in July, Ms. Lagarde said debt restructuring “is needed in the particular case of Greece for it to have debt sustainability.”
- JIM LO SCALZO/EUROPEAN PRESSPHOTO AGENCY
She also set out to repair the IMF’s image among emerging markets by trying to restore credibility lost in the Greek debt crisis. Under Dominique Strauss-Kahn, the IMF had become a junior partner to its powerful eurozone members, fostering the perception the fund’s European and American leadership gave its Western members preferential treatment.
“For us to be credible, I had to make sure that we were evenhanded and that we were not protecting or giving special treatment,” Ms. Lagarde said in a recent interview.
Less than a year into her tenure, Ms. Lagarde backed a plan to restructure Greece’s debt in the largest sovereign debt relief in history.
She also used her bully pulpit as the world’s premier economic adviser to push Europe into recapitalizing its banking sector. The advice initially drew sharp criticisms from her old colleagues. Christian Noyer, France’s central bank governor, suggested Ms. Lagarde needed her head examined. The eurozone ultimately heeded the counsel.
While Ms. Lagarde may struggle to right the listing ship of the global economy, that doesn’t mean she isn’t reshaping the world, or that her prodding isn’t changing the course of history.
The very presence of a woman with the IMF’s trillion-dollar purse flanked by sturdy female bodyguards sends a powerful message in countries such as the North African nation of Tunisia, where a traditional painting outside the central bank governor’s office depicts three women serving a seated man.
Men aren’t allowed—including top staff—at private meetings she hosts in every country she visits as she seeks to encourage influential local female entrepreneurs, academics, politicians, writers and thinkers.
“An inner sense of justice and fairness” drives her, she said, a passion that sometimes shows through her tempered public appearances.
Answering questions at a public event in Monrovia’s city hall last month, the IMF chief criticized unnamed Liberian officials for focusing more on elections than the public good. “I know I’m interfering…but I want to say what I have on my heart,” she said.
Beyond simply chiding male-dominated governments, Ms. Lagarde has directed the fund’s considerable research capacity to explore the economic implications of income and gender inequality. Saudi Arabia—a country with one of the lowest rates of women in the workforce—has asked for the IMF to study how greater female participation in the labor force can boost growth.
In a major shift of focus for the fund, the IMF last year launched a major policy initiative showing income inequality as a drag on growth.
The IMF chief argues those efforts will not only create more competitive societies that boost long-term growth, but propagate economic and political stability.
“That is power: the ability to tell people the truth, maybe when they don’t want to listen,” said Ms. Lagarde.
Related reading:
The IMF’s Christine Lagarde on What Drives Her
IMF Downgrades Global Economic Outlook Again
IMF’s Lagarde Faces Daunting Task as Term Nears End
Gender Equality an ‘Economic No-Brainer,’ Says IMF Chief
‘Insidious Conspiracy’ Against Women Costs Economies Up to 30% of GDP, Says IMF Chief
from Real Time Economics http://ift.tt/1Q5Hz5s
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